Asongu, Simplice (2013): New financial development indicators: with a critical contribution to inequality empirics.
Preview |
PDF
MPRA_paper_56806.pdf Download (496kB) | Preview |
Abstract
The employment of financial development indicators without due consideration to country/regional specific financial development realities remains an issue of substantial policy relevance. Financial depth in the perspective of money supply is not equal to liquid liabilities in every development context. This paper introduces complementary indicators to the existing Financial Development and Structure Database (FDSD). Dynamic panel system GMM estimations are applied. Different specifications, non-overlapping intervals and control variables are used to check the consistency of estimated coefficients. Our results suggest that from an absolute standpoint (GDP base measures), all financial sectors are pro-poor. However, three interesting findings are drawn from measures of sector importance. (1) The expansion of the formal financial sector to the detriment of other financial sectors has a disequalizing income effect. (2) Growth of informal and semi-formal financial sectors at the expense of the formal financial sector has an income equalizing effect. (3) The positive income redistributive effect of semi-formal finance in financial sector competition is higher than the corresponding impact of informal finance. It unites two streams of research by contributing at the same time to the macroeconomic literature on measuring financial development and responding to the growing field of economic development by means of informal financial sector promotion and microfinance. The paper suggests a practicable way to disentangle the effects of the various financial sectors on economic development. The equation of financial depth in the perspective of money supply to liquid liabilities has put on the margin the burgeoning informal financial sector in developing countries. The phenomenon of mobile banking is such an example.
Item Type: | MPRA Paper |
---|---|
Original Title: | New financial development indicators: with a critical contribution to inequality empirics |
Language: | English |
Keywords: | Financial Development; Shadow Economy; Poverty; Inequality; Africa |
Subjects: | E - Macroeconomics and Monetary Economics > E0 - General > E00 - General G - Financial Economics > G2 - Financial Institutions and Services > G20 - General I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I30 - General O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa |
Item ID: | 56806 |
Depositing User: | Simplice Asongu |
Date Deposited: | 23 Jun 2014 12:51 |
Last Modified: | 04 Oct 2019 21:33 |
References: | Abu-Bader, S., & Abu-Qarn, A. S., (2008). “Financial Development and Economic Growth: Empirical Evidence from Six MENA countries”, Review of Development Economics, 12(4), pp. 803-817. African Development Bank: AfDB. (2012). “Income Inequality in Africa”, Brief Notes 5. Albanesi, S., (2007). “Inflation and Inequality”, Journal of Monetary Economics, 54(4), pp.1088-1114. Ang, J. B. & McKibbin, W. J., (2007). “Financial Liberalization, financial sector development and growth: Evidence from Malaysia”, Journal of Development Economics, 84, pp.215-233. Arellano, M., & Bond, S., (1991). “Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations”, The Review of Economic Studies, 58, pp. 277-297. Arellano, M., & Bover, O., (1995). “Another look at the instrumental variable estimation of error-components models”, Journal of Econometrics, 68, pp.29-52. Arestis, P., & Caner, A., (2010). “Capital Account Liberalization and Poverty: How Close is the Link?”, Cambridge Journal of Economics, 34(2), pp.295-323. Aryeetey, E., (2008, March). “From Informal Finance to Formal Finance in Sub-Saharan Africa: Lessons from Linkage Efforts”, Institute of Statistical, Social and Economic Research, University of Ghana. Asongu, S. A, (2013a). “How has mobile phone penetration stimulated financial development in Africa”, Journal of African Business, 14(1), pp. 7-18. Asongu, S. A., (2013b). “How do financial reforms affect inequality through financial sector competition? Evidence from Africa”, Economics Bulletin, 33(1), pp. 401-414. Asongu, S. A., (2013c). “How do institutions matter in the income-equalizing effect of mobile phone penetration?”, European Economics Letters, 2(2), pp. 56-61. Asongu, S. A., (2013d). “Investment And Inequality in Africa: Which Financial Channels Are Good For The Poor?”, African Finance Journal, 15(2), pp. 43-65. Asongu, S. A., (2013e). “Harmonizing IPRs on Software Piracy: Empirics of Trajectories in Africa”, Journal of Business Ethics, 118(3), pp. 667-682. Asongu, S. A., (2014a). “Mobile banking and mobile phone penetration : which is more pro-poor in Africa ?”, African Finance Journal: Forthcoming. Asongu, S. A., (2014b). “Financial Sector Competition and Knowledge Economy: Evidence from SSA and MENA Countries”, Journal of the Knowledge Economy: Forthcoming. http://link.springer.com/article/10.1007/s13132-012-0141-4 Asongu, S. A., (2014c). “Knowledge economy and financial sector competition in African countries”, African Development Review: Forthcoming. Asongu, S. A., (2014d). “Liberalization and financial sector competition: a critical contribution to the empirics with an African assessment”, South African Journal of Economics: http://onlinelibrary.wiley.com/doi/10.1111/saje.12048/abstract Banerjee, A. V., & Newman, A. F., (1993). “Occupational Choice and the Process of Development”, Journal of Political Economy, 101(21), pp. 274-298. Batuo, M. E., Guidi, F., & Mlambo, K., (2010, August). “Financial Development and Income Inequality: Evidence from African countries”. African Development Bank. Batuo, M. E., & Kupukile, M., (2010). “How can Economic and Political Liberalization Improve Financial Development in African Countries”, MPRA Paper No. 20651. Beck, T., Demirgüç-Kunt, A., & Levine, R., (1999). “A New Database on Financial Development and Structure”, Financial Sector Discussion Paper No. 2. Beck, T., Demirgüç-Kunt, A., & Levine, R., (2004, June). “Finance, Inequality and Poverty: Cross-country Evidences”. World Bank Policy Research Working Paper No.3338. Beck, T., Demirgüç-Kunt, A., & Levine, R.,(2007). “Finance, inequality and the poor”. Journal of Economic Growth, 12(1), pp. 27-49. Blundell, R., & Bond, S., (1998). “Initial conditions and moment restrictions in dynamic panel data models”, Journal of Econometrics, 87(1), pp.115-143. Bond, S., Hoeffler, A., & Tample, J., (2001). “GMM Estimation of Empirical Growth Models”, University of Oxford. Bulir, A., (1998). “Income inequality: does inflation matter?”, IMF Working Paper No.98/7. Claessens, Stijn, Demirgüç-Kunt, A, & Huizinga, H., (2001). “How does foreign entry affect the domestic banking market? Journal of Banking and Finance 25 (May), pp. 891–911. Demetriades, P.O., & Hussein, K. A., (1996). “Does Financial Development Cause Economic Growth? Time-Series Evidence from Sixteen Countries,” Journal of Development Economics, 51, pp. 387-411. Demirgüç-Kunt, A., & Levine, R., (2008). Finance, Financial Sector Policies, and Long-Run Growth, World Bank Policy Research Working Paper No. 4469, Washington, DC: The World Bank. Demirguc-Kunt, A., Beck, T., & Levine, R., (1999). “A New Database on Financial Development and Structure”, International Monetary Fund, WP 2146. Demirguc-Kunt, A., & Beck, T., (2009, May). “Financial Institutions and Markets Across Countries over time: Data and Analysis”, World Bank Policy Research Working Paper No. 4943. Galor, O., & Zeira, J., (1993). “Income Distribution and Macroeconomics”, Review of Economics, 60(1), pp. 35-52. Gries, T., Kraft, M., & Meierrieks, D., (2009). “Linkages between financial deepening, trade openness, and economic development: causality evidence from Sub-Saharan Africa”, World Development, 37(12), pp. 1849-1860. Hassan, K., Sanchez, B., & Yu, J., (2011). “Financial development and economic growth: New evidence from panel data”, The Quarterly Review of Economics and Finance, 51, pp.88-104. IMF Statistics Department, (2008, October). “International Financial Statistics Yearbook, 2008”, IMF. Janine, A., & Elbadawi, I. A., (1992). “Parallel Markets, the foreign Exchange Auction, and Exchange Rate Unification in Zambia”. World Bank Policy Working Paper No. 909, The World Bank. Kablan, S., (2010). “Banking Efficiency and Financial Development in Sub-Saharan Africa”, IMF Working Paper /10/136. Kai, H., & Hamori, S., (2009). “Globalization, financial depth and inequality in Sub-Saharan Africa”. Economics Bulletin, 29 (3), pp. 2025-2037. King, R.G., & Ross, L., (1993). “Finance and Growth: Schumpeter Might Be Right”, Quarterly Journal of Economics, 108, pp. 717-737. Kumbhakar, S. C., & Mavrotas, G., (2005). “Financial Sector Development and Productivity Growth”. UNUWIDER Research Paper: 2005/68, World Institute for Development Economics Research at the United Nations University. Levine, R., & King, R. G., (1993). “Finance and Growth: Schumpeter Might be Right”, The Quarterly Journal of Economics, 108, pp. 717-737. Lopéz, J. H., (2004). “Pro-growth, Pro-poor: Is There a Tradeoff?”, World Bank Publications. McKinnon, R., (1973). Money and Capital in Economic Development. Brookings Institution Press, Washington DC. Shaw, E., (1973). Financial Deepening in Economic Development, New York, Oxford University Press. Steel, W. F., 2006. “Extending Financial Systems to the poor: What strategies for Ghana”,Paper presented at the 7th ISSER-Merchant Bank Annual Economic Lectures, University of Ghana, Legon. World Bank, (1989). World Bank Development report 1989, New York, Oxford University Press. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/56806 |